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Institute for Crisis, Disaster, and Risk Management Crisis and Emergency Management Newsletter Website |
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February
2006
Volume
10 - Number 1 |
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Disasters: A Professional Insight
By John Harris A crisis is an unstable condition resulting in change,
while a disaster can be defined as “a total failure.” Having
served as an Insurance Adjuster for 15 years, I’ve handled all manner of crises
and disasters, including natural, manmade, and technological. Victims
of disasters can be classified into one of three categories. Category
A is the unprepared, category B is the prepared but “disasters happen to
someone else”, and category C is the prepared with redundancy built into their
recovery plan.
The characteristics of Category A are persons or businesses that do not have ownership of the risk and are most often economically poor. The most notable examples of this category are tenants of apartment buildings. Over 75% of the time, in the claims I have handled which involve multiple-unit dwellings and tenants, the tenants do not have insurance or adequate financial resources to assist themselves in either an emergency capacity or to immediately endure the brunt of their loss. Following disasters, most person(s) who are category A must rely on the goodness of organizations such as The Red Cross for shelter, food, and guidance in the immediate aftermath. Examples of Category B are persons, businesses, and governments who do have ownership of the risk, whose economic resources may range from limited to unlimited, and their recovery plan is based on their insurance plan. They are dependent on insurance for their short term and long term viability. During Hurricane Isabel, I handled dozens of claims in which homeowners lost power. As a result of the loss of power, the events cascaded. Without power, they lost heat in their risk, their basements flooded, food spoiled, and ultimately many of these victims were forced to leave their homes with no plan to address their basic needs in the immediate future. Depending on their economic resources, many of these victims like category A victims, had to rely on the goodness of organizations such as The Red Cross in the aftermath. Category C are persons, businesses, and governments who do have ownership of the risk, whose economic resources may range from limited to unlimited, and do have a well defined Recovery Plan. Most notable is that they recognize that regardless of insurance and other organizations’ good will and charity, their ultimate survival of a disaster can only be “guaranteed” by their planning and preparation. Examples of this category are two claims which I adjusted for a hotel that had its telecommunications system destroyed by a power surge 16 months apart. The first time this occurred, the hotel’s disaster plan was to call their insurance company with the allusion that insurance would keep their business running. This crisis turned into a disaster as they were shut down for weeks. They lost short term and long term clientele affecting their cash flow, payroll and expenses. Ultimately, using all of their limited cash resources, they replaced their telecommunications and sought reimbursement from the insurance company. Approximately 16 months later, this same hotel again sustained significant damages to its telecommunication system. Unlike the previous event, this time the hotel had a plan and, as a part of that plan, insurance. Through solid leadership, business relationships, and available economic resources, they enacted their plan which mitigated their loss to an economic impact of days. This ultimately prevented the crisis from becoming a disaster from which they were able to easily manage and recover. In conclusion, I suggest that the best way to recover from a disaster is having the understanding and foresight to plan and prepare for crises and disasters. While recognizing financial limitations, no matter what category one falls in, successful survival of a disaster is the ability to be self-reliant. A plan that defaults to the ability and leadership of others may prove to be insufficient. |